Stocks end mixed after Greenspan

Tuesday's session uneven due to data, Fed comments

LeslieWines

MarkCotton

NEW YORK (MarketWatch) -- U.S. stocks closed mixed Tuesday after a tame speech by Federal Reserve Chairman Alan Greenspan helped offset losses caused by disappointment consumer confidence and new home sales figures.

The Dow Jones Industrial Average
DJIA, +0.35%
closed up 12.58 points at 10,456.21. The top performer on the Dow, Boeing
BA, +3.77%
registered an almost 3% gain.

The Nasdaq Composite
$COMPX
lost 5.04 points to end at 2,116.42 and the S&P 500
SPX, +0.01%
gained just 0.03 points for a nearly flat close at 1,215.66.

Declining stocks outnumbered rising shares by 18 to 13 on the New York Stock Exchange, where volume exceeded 1.49 billion. There were more than 1.63 billion shares traded in the Nasdaq market, where falling shares outpaced winners by 16 to 13.

The major averages switched course several times Tuesday, as the market reacted to new data reports and speeches by Federal Reserve officials.

Shares rose to their highest levels of the day after Federal Reserve Chairman Alan Greenspan told the National Association of Business Economics in Chicago that key sectors of business and finance have made the U.S. economy flexible enough to survive a series of shocks including 9/11. See full story.

Investors had been worried the Greenspan would express concern about growing inflationary pressures, and drop hints that the Fed may switch to a more aggressive stance on future interest-rate increases.

"Greenspan said nothing about monetary policy or the economy," said Peter Boockvar, equity strategist at Miller Tabak. "So it looks like there could be some short-covering by guys who were nervous he would say something hawkish."

Boockvar said worries about a more hawkish Fed were triggered earlier in the session when San Francisco Fed President said rising energy prices had put the central bank "on the horns of dilemma."

Earlier, stocks saw opening gains fade after the Conference Board reported that its consumer confidence index fell to 86.6 in September from 105.5 in August, marking the lowest level since October, 2003. Read full survey. Economists were expecting the index to decline to 94.9, according to a survey conducted by MarketWatch. See Economic Calendar.

Separately, the Commerce Department said new home sales slumped 9.9% in August to a seasonally adjusted 1.24 million. See full story. Economists surveyed by MarketWatch were expecting the pace of home sales to cool slightly in August, to 1.34 million units. See Economic Calendar.

Oil futures ended lower, as traders struggled to figure out the extent of damage to energy facilities caused by recent hurricanes. The front-month fell 75 cents to $65.07. See full story.

Gold futures closed at their lowest level in nearly two weeks on the stronger dollar and weakness in oil prices. The benchmark December contract fell $3.30 to $466.20 an ounce, but off an intraday low of $465.80. See full story.

The dollar hit two-month highs against the yen and euro after recent remarks by Kansas City Fed President Thomas Hoenig were seen as sending yet another signal that the Fed intends to keep raising rates. The dollar last was up 1% at 113.45 yen, while the euro fell 0.7% to $1.1994. See full story.

Treasurys closed unchanged after mercurial price action that included both gains and losses as the market largely marked time ahead of the Greenspan speech. The benchmark 10-year Treasury note finished the session unchanged at 99-20/32 with a yield
TNX, -1.12%
of 4.3%. See full story.

Stocks on the march

Dow component Boeing Co.
BA, +3.77%
closed up almost 3% at $66.55, extending a prior-session gain of 2.3% as the aerospace giant continued to benefit from news of a tentative agreement with its machinists union that could end a strike by more than 18,000 workers.

Taser International Inc.
TASR
ended almost 13% lower at $6.35 after announcing that a previously disclosed inquiry into the company by the Securities and Exchange Commission has now been deemed formal. See full story.

Health insurer WellChoice Inc.
WC
rose 6.6% to $75.27, after news that fellow insurer WellPoint
WLP
is buying it for $6.5 billion in cash and stock. WellPoint shares rose 13 cents to $75.22. See full story.

Pepsi Bottling Group Inc.
PBG, +1.50%
gained 3% to $28.46. The company reported third-quarter net income of $205 million, or 82 cents a share, compared to $191 million, or 73 cents a share, a year ago. The results include a 4 cents a share gain from litigation settlement. Analysts polled by Thomson First Call had been expecting earnings of 78 cents a share. The company projected record earnings per share for fiscal 2005.

Auto parts maker Delphi
DPH, +0.00%
continued its recent slide, dropping 8% to $2.75. The stock closed almost 14% lower on Monday after being hammered by concerns that it may not be able to avoid a bankruptcy filing.

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